The present invention relates to financial systems, and more particularly, to an improved automated investment system for investing idle funds of customers of investment banks.
Very often the Treasurer of a company, or other financial officer responsible for funds of the company, will have on hand large amounts of cash or other funds that are not needed immediately, or in the near future for the operation of the company. In a situation such as this, the officer will seek to put these idle funds to work by depositing them in an interest bearing investment until such time as they are needed. One alternative available to financial officers having a large amount of funds on hand is to invest in the short term investments traded in the repurchase (repo) market. Active during conventional selling times of each business day, i.e., generally the early to late morning hours, this market offers a financial officer the option of purchasing short term investments which reflect an interest in various underlying interest bearing and discounted securities and instruments (hereinafter "securities"), typically not specifically identified. These investments, which are offered by investment banks are sold through salespeople in large, conventional denominations or blocks often equalling or exceeding $500,000. Typically, a limited selection of denominations and a very limited selection of maturities and rates of return are offered.
Thus, for example, if a corporate treasurer receives funds totaling $500,000 on the morning of a given business day and tnese funds will not be utilized by the corporation for several days, the treasurer may put such funds to work by investing tnem in the repo market in a short term investment providing a specified rate of return and having a maturity comparable to the period of time during which the funds will not be needed.
Very often, however, the amount of funds which a financial officer has on hand will be an odd amount, i.e., more or less than the conventional denominations of the securities traded in the repo market. Similarly, very often a Treasurer or financial officer will receive a large amount of cash late in the day, at a time past the normal morning hours during which investment opportunities are available in the repo market. Under such circumstances, the investing officer may find that he is able to invest only a part of his idle funds where the uninvested amount represent an odd amount, or is able to invest none of his idle funds because they were too small or received too late in the day.
By law investment banking arms of commercial banks cannot commingle the funds of customers not involved in a trust relationship with them, preventing them from combining the odd amounts of various customers to arrive at the standard denominations of the securities and repurchase agreements they sell. As a consequence of this, and the legal prohibition against banks paying interest on demand deposit accounts of corporate customers, many financial officers are often left holding a large amount of idle funds which cannot be put to work completely, or in certain instances, at all.
Accordingly, it is a primary object of the present invention to provide an improved investment system for investment banks which, while complying with all applicable banking regulations, allows the banks' customers to invest odd amounts of idle funds which they may have on hand.
It is another object of the present invention to provide an investment system as previously described which allows bank customers to invest their idle funds at unconventional times of the day.
It is a further object of the present invention to provide an investment system as previously described which is automated, and therefore, avoids the need for bank customers to interact with a salesperson.
It is yet another object of the present invention to provide an investment system as previously described which allows bank customers to invest odd amounts of idle funds by purchasing an investment vehicle representing whole and/or fractionalized undivided interests in individual securities and instruments offered by investment banks.